A mixed bag of
Chinese data out in May didn't help fears of a Chinese hard
landing. But Barclays analyst Jian Chang and her team write that
there are signs that China's growth is "bottoming, but not yet
out".

Many supportive measures have been rolled out since May, with the
the National Development and Reform Commission (NDRC)
accelerating the pace of project approvals and the announcement
of fiscal subsidies to boost consumption, not to mention the RRR,
deposit, and interest rate cuts.

"Therefore, we continue to look for the growth to bottom in the
current quarter, and expect the policy easing measures to
gradually impact the economy," writes Chang. Some of these signs
of stabilization or bottoming growth were evident in May data:

Property investment also held up at 18.5
percent YoY in May, marginally lower from 18.7 percent in
April, but with a rebound in residential investment which
jumped to 12.8 percent, from 4 percent in April.

Auto sales posted its first Ytd growth in May.

Credit structure, a crucial indicator also
showed some improvement in May, with new loans
rising to 793 billion yuan in May, from 682 billion yuan in
April.

For now Chang and her team have revised down their Q2 GDP
projections to 7.5 percent YoY, from 7.7 percent. They have
however maintained their full-year forecast of 8.1 percent
growth. They do expect the central bank to lower benchmark
interest rate by 25 basis points and the reserve requirement
ratio (RRR) by 100 basis points because of the risk of capital
outflow.